By: Fei Chen
In the Chinese word for crisis ‘weiji’ (??), ‘wei’ ? means danger, and ‘ji’ ? means opportunity. Crisis does not have the same meaning in China as in Western society. Chinese people believe that danger can be turned into opportunity, if one acts wisely according to under the circumstances. This mentality can be clearly seen in the way that China has tackled the global financial crisis.
China’s spends 7% of its GDP on stimulus
In November 2008, China announced a huge economic stimulus package aimed at bolstering its weakening economy. It is estimated that in 2010 the Chinese government will spend an estimated $586 billion on a wide array of national infrastructure and social welfare projects. This package represents about 7% of China’s GDP for each of the next two years.
By comparison, the US, with an economy of almost $14 trillion, disbursed some $100 billion in tax rebates in summer 2009, and Germany has agreed a €23 billion stimulus plan, about 2% of its GDP.
Almost 10% allocated to updating the industrial sector
China’s National Development and Reform Commission published a breakdown of how the funds would be distributed. 370 billion yuan is allocated to a technology advancement programme targeted at upgrading the Chinese industrial sector, and moving high-end production away from its current export-oriented and labour-intensive mode of growth. This is in line with the government’s latest blueprint for revitalising 10 selected industries.
To ensure sustainable development, the Chinese government has allocated some 210 billion yuan, or 5.3% of the stimulus package, to promote energy savings and to cut gas emissions, and support environmental engineering projects.
China’s stimulus package is having an effect
According to the World Bank, China and India will be the only big countries with significant growth in 2009. Despite falling export demand, the World Bank in June 2009 estimated that China would achieve growth of 6.5%; in November 2009, the World Bank revised this estimate of Chinese growth to 7.2%. The Chinese Government’s strong stimulus package is starting to show some effect!
Asian innovators yield higher shareholder returns
I believe this explains very well why China has been able to achieve such exceptional economic growth in the last 20 years, following Mao’s destructive Cultural Revolution, and why China is able to demonstrate such super effective learning and adoption(Fei Chen)
In the last 2000 years, Confucianism has dominated the mentality in China and many other Asian countries. Most Chinese people believe that world is a harmonious entity, that different phenomena link together, and change is an inexorable reality of life. This mentality has made Chinese thinking positive and flexible, providing an appetite for change and opportunity.
Recent research shows that many leading Asian companies are investing heavily in innovation, and are building up their innovation capability and capacity very rapidly. These companies are in transition from imitator to innovator. Samsung and Huawei are two excellent examples of successful Asian innovators. Research also demonstrates that Asian innovators provide much higher returns to shareholders than their counterparts in America and Europe.
Rethinking collaboration with Asia
As a result of the global financial crisis, many western companies have reduced their investment in Asia. They have made heavy budget cuts and are focusing on short term results in the hope that they can maintain their core competences and capacities and be able to move forward again when growth returns.
The global financial crisis has triggered many debates. It is clear that the world is undergoing some major fundamental changes and that many things will be different when the crisis is finally over: there will be new rules of the game and a new role for distribution.
The west must rethink its role in the new world economy and learn to collaborate with the new strongly growing East. China and India will soon no longer be under developed countries. They will be the assembly factories for the world and equal collaboration partners for innovation.
About Fei Chen
Fei Chen, PhD, is Director for Technology Scouting at Coloplast A/S in Denmark. She studied for her Masters in Chemical Engineer in China, and was awarded a PhD from the Technical University of Denmark. Fei Chen has worked for 18 years in research and development, sales and marketing and business development.
She has solid experience in innovation leadership in global companies and has gained hands on experience in entrepreneur leadership through a biotech start up company. She has wide knowledge of various industries: medical devices, biotechnology, food and environment. Her Chinese background and solid business experience in Denmark makes Fei Chen a strong bridge between these two cultures.